Euro (EUR)

The euro is the official currency of the Eurozone – 17 of 27 countries within the European Union – and its constituencies as well as the European Union financial institutions.

Symbolically designated with the € sign, it is also registered in financial transactions and currency trading as EUR. Because the euro is the only currency to use the € symbol and is used by numerous countries, it does not have a country designation preceding it—merely a numerical value following it.

The euro is a decimal-based currency system with its smallest unit as the one-cent piece, commonly called the euro cent. Written currency is noted with a maximum of two digits to the right of the decimal point, giving each whole euro 100 euro cents in value.

The euro coinage is often designated using a lower-case C next to the numerical representation of the denomination. Coin denominations include 1c, 2c, 5c, 10c, 20c, 50c, €1 and €2 coinage.

All coins share a common side whose design reflects a map of the original 15 member states. The reverse side of all coins have images unique to the issuing Eurozone member country.

Euro banknotes are fiat currencies, not backed by a real commodity. As legal tender, the euro can be used to pay for purchases and to pay debts. The currency’s origination country doesn’t matter, but for transaction convenience and reduction of coinage costs, Finland prohibits use of the 1c coin by law, and the Netherlands voluntarily restricts use of the 1c coin. Instead, transactions are rounded to the nearest 5c mark.

The euro is the second-most traded and reserve currency in the world. It was officially adopted in 1995 for commercial and international use, but physical currency was not issued until 2002 for general use.

The Eurozone countries share in the risk of currency deflation and inflation, and member states have debated openly from 2009 whether the EUR currency should be disbanded with each country reverting to independent currency systems. Considering the drop in the EUR value and the vast fluctuation in exchange trading, the debate has escalated through mid-2011 with no solution yet in sight.